First Annual Review and the Privacy Shield is Still Standing: What’s Next?

On October 18, 2017, the European Commission issued its report on the first annual review of the EU- U.S. Privacy Shield, aimed at allowing personal data transfer from the EU to the U.S. through the implementation of a data protection framework providing an adequate level of protection in the U.S. Over 2,400 companies have now been certified under the Privacy Shield framework by the U.S. Department of Commerce.

From the European Commission’s perspective, the Privacy Shield continues to ensure an adequate level of protection, including new redress possibilities for individuals, enforcement procedures, and cooperation with the European data protection authorities. However, as “[t]he Privacy Shield is not a document lying in a drawer” but “a living arrangement that both the EU and U.S. must actively monitor”, the Commission made some recommendations to improve the current framework:

“More proactive and regular monitoring of companies’ compliance with their Privacy Shield obligations by the U.S. Department of Commerce.

More awareness-raising for EU individuals about how to exercise their rights under the Privacy Shield, notably on how to lodge complaints.

Closer cooperation between privacy enforcers i.e. the U.S. Department of Commerce, the Federal Trade Commission, and the EU Data Protection Authorities (DPAs), notably to develop guidance for companies and enforcers.

Enshrining the protection for non-Americans offered by Presidential Policy Directive 28 (PPD-28), as part of the ongoing debate in the U.S. on the reauthorization and reform of Section 702 of the Foreign Intelligence Surveillance Act (FISA).

To appoint as soon as possible a permanent Privacy Shield Ombudsperson, as well as ensuring the empty posts are filled on the Privacy and Civil Liberties Oversight Board (PCLOB).”

Is this review a sufficient guarantee for U.S. businesses to continue to rely on their Privacy Shield certification with absolute trust? That remains to be seen. Indeed, the Commission negotiated the Privacy Shield agreement to reconcile the data exchange economy with the standard that must be reached in order to comply with the requirements imposed by the EU Court of Justice (CJEU). The Commission was expected to advocate for the ongoing validity of the compromise. However, a number of authorities and data protection defenders are of the opposite opinion.

The European Data Protection Supervisor, one of the strongest official voices on data protection in the EU, already had some concerns about its validity (Opinion n° 4/2016 of May 30, 2016). So did the Working Party of Article 29, gathering all national data protection authority at the EU level (Opinion n° 1/2016 of April 13, 2016). These two authorities will soon issue their own reports on this first annual review. Furthermore, these reports could have some impact on the outcome of the two actions currently pending before the CJEU, which aim at invalidating the Privacy Shield’s adequacy decision on the following grounds:

The possibility for U.S. agencies to legally access, on a generalized basis, the content of electronic communications;

The absence of complete transposition of the right to access, rectify, oppose and erase, that the EU regulations grant to data subjects; and

The absence of a fully independent U.S. data protection authority, with complete effective and binding redress power.

U.S. entities certified with the Privacy Shield should closely monitor the development of those cases since, in the end, the CJEU will have the final say. It would also be prudent for them to take advantage of the opportunity to implement additional safeguards by using other data transfer mechanisms, such as Binding Corporate Rules, Certification (when available), adherence to approved Codes of Conduct or Standard Contractual Clauses.

For more information on the future of the Privacy Shield, please refer to the following Password Protected blog posts:

Editors

Partner

Andrew chairs the firm’s data privacy and security team and supply chain management practice. He counsels clients on proactive measures to prevent the occurrence of security breaches, investigations, lawsuits and other harmful events.

Associate

Emily practices in the area of data privacy and security, counseling clients regarding data security policies, compliance with breach notification laws and terms of use and privacy policies for websites.

Associate

Meaghan advises clients on state and federal data privacy and security laws, including banking regulations surrounding data privacy practices. She has experience with "bring your own device” policies and cloud computing, as well as the Telephone Consumer Protection Act and the Telephone Solicitation Rule.

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